danmarks nationalbank · via danmarks nationalbank) • the intradagclearing • the...

DANMARKSNATIONALBANK 3 0 M A RC H 2 0 1 7 — N O. 6

ANALYSIS

Danes are Front-Runners in Electronic Payments

Well-functioning and modern market for payments

Kr. 24 billionis moved every day. The systems ensure that payments are settled quickly and smoothly.

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Danes prefer electronic payments

No. 1 in EUEach Dane swipes his or her payment card 300 times a year.

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Instant payments enable quick transfer of funds

A few seconds and the money is available to the payee.

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Denmark is a digital front-runner

77 per cent of the Danes shop online. We are more digital than other EU-citizens.

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A N A LYS I S — DA N M A R K S N AT I O N A L BA N KDA N E S A R E F RO N T- RU N N E R S I N E L E C T RO N I C PAY M E N T S

2

Denmark has a well-functioning and modern market for paymentsDanes make electronic payments every day, for instance in physical stores, online or among them-selves, totalling kr. 24 billion. These payments are known as retail payments.1 Funds from the buyer to the seller are transferred through the common Dan-ish retail payments infrastructure. In the course of one year, more than kr. 8,700 billion passes through the systems – equivalent to more than four times the Danish gross domestic product (GDP).

The large payment flows are processed through the Danes’ retail payments infrastructure. This infra-structure comprises a set of IT systems, designed to settle Danish payments quickly, smoothly and securely. All banks in Denmark are connected to the payments infrastructure – either directly or indirect-ly through another bank. Direct participants hold a settlement account at Danmarks Nationalbank, and through this account payments can be transferred between all bank accounts in Denmark.

All retail payments are processed through one of the three clearing systems: the Sumclearing, the Intradagclearing or the Straksclearing, cf. Chart 1. The systems differ, inter alia, by having different settlement times, i.e. the time it takes to transfer the funds from the payer’s account to the payee’s account. The three systems handle different types of payment solutions. Examples of payment solutions are payment cards or transfers from one account to another account via online banking facilities.

The Sumclearing settles many of the most widely used payment solutions such as debit and credit cards. It typically takes one business day from the payer swipes his or her card until the funds are credited to the payee’s bank account. The Intradagclearing settles transfers between bank accounts, known as credit transfers. In this system, payments are settled in several daily settlement cycles, and the funds are typically made available to the payee within a few hours. Credit transfers can also be settled in the Straksclearing. In this sys-tem, payments are settled instantly, entailing that

1 Retail payments also include payments made using inpayment forms, Betalingsservice (direct debit), LeverandørService (sup-plier service), Overførselsservice and automatic card payments. Payers can be households, firms or public authorities.

MobilePay Box 1

The MobilePay mobile payment solution was launched

in the Danish payments market in 2013. This solution

enabled private individuals to make transfers using their

mobile phones. In just over three years, MobilePay in

Denmark has been adopted by more than 3.3 million

users, making more than 170 million payments in 2016.

The modernisation of the Danish payments infrastructure 2012-14

Box 2

The purpose of the modernisation project was to reduce

the period of time from a payment is initiated until it is

received. The project was a joint effort by the Danish

financial sector and Danmarks Nationalbank and compri-

sed a total of four initiatives:

• Faster settlement of Dankort payments made during

weekends

• Faster settlement of large-value payments (transfers

via Danmarks Nationalbank)

• The Intradagclearing

• The Straksclearing.

November 2014 saw the completion of the final initia-

tive (the Straksclearing) after which the common retail

payments infrastructure consists of three systems for the

settlement of retail payments, enabling citizens and firms

in Denmark to transfer funds within seconds. The three

systems are owned by FinanceDenmark.

Danmarks Nationalbank sees modernisation as a key

element in its efforts to facilitate secure payments and

contribute to financial stability in Denmark. Currently,

Danmarks Nationalbank is replacing the existing systems,

e.g. for the settlement of large, time-critical payments,

by a new system, Kronos2. Danmarks Nationalbank is

also monitoring technological advances with a view to

future solutions, e.g. advances within distributed ledger

technology.

1. The background for the modernisation project was Report on

domestic payment transfers in Denmark, January 2012 prepared

by the working group on domestic payment transfers.


ANALYSIS

Danes' card use is among the highest in Europe

In Denmark, funds can be transferred within seconds


Denmark has an efficient and up-to-date market for payments. Payments are settled quickly and

smoothly. Payments can be made between all bank accounts, and instant payments allow funds to be

transferred in seconds.

Instantly

The average Dane pays by credit cards about 300 times each year, an increase

of almost 50 per cent on 2011.

Denmark is one of the most digitised countries in the world. This is among other factors driven

by the public sector's focus on digitisation.

Danes are quicker to embrace new technology

Danes have become increasingly eager to adopt new payment options. MobilePay was adopted by about

three million users within three years. It took more than 15 years for the Dankort to be adopted by the same

number of users. Contactless payments are the latest example of how quickly Danes can change their payment

behaviour. In the course of a year and a half, 15 per cent of all Dankort payments have become contactless.

MOBILE PAYMENTS

THE STRAKS-CLEARING

DANMARKS NATIONALBANK

THE INTRA-DAGCLEARING

THE SUM-CLEARING

DEBIT CARD

CONSUMER

CREDIT CARD CREDIT TRANSFERS

Same dayOne business day

Per capita card payments in selected European countries

50,00

Danish digital highways

Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet

European Commission's Digital Economy and Society Index, 2017

Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort

5 years0 year 10 years 15 years 20 years

1999 Online banking

2013 MobilePay

2015 Contactless

How long it has taken for new payment instruments to be adopted by 3 million users

50,00

The transfer of funds through the systems

Chart 1 3

the funds are made available to the payee within seconds. This applies 24/7/365. Payments trans-ferred through the Straksclearing may not exceed kr. 500,000.

A common retail payments infrastructure such as the Straksclearing makes it easier to roll out new payment solutions to all Danes wishing to use them.

One example is the MobilePay mobile payment solu-tion, which currently accounts for most payments in the Straksclearing. MobilePay is described in Box 1.

The Straksclearing was launched in November 2014 as the last step in a major process to modernise the Danish payments infrastructure. The project is described in more detail in Box 2.


4

to enable instant euro payments across euro mem-ber states.

Danes opt for electronic solutions For a number of years, cash payments have been de-clining as more and smarter electronic alternatives have been launched. Danish consumers primarily opt for electronic payment solutions, especially payment cards. In 2016, card payments were estimated to ac-count for around 80 per cent of total retail turnover, cf. Chart 3.

Danes use cards more than any other EU citizensPayment card use in the Nordic countries is generally much higher than in other European countries, cf. Chart 4. In 2015, the average Dane swiped his or her payment card 300 times. This is an increase of close to 50 per cent on 2011. All citizens are entitled to a payment card, cf. Box 3.

Retail turnover etc., broken down by cash, cheque and card payments

Chart 3

0

10

20

30

40

50

60

70

80

90

100

Per cent

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Cash payments

Cheque payments

Card payments

Note: MobilePay payments (from 2013) are payments with an underlying payment card and therefore included in card payments. Cheques have practically not been used in re-cent years, and at the end of 2016 Danish banks stopped cashing cheques. Retail turnover etc. is a broader compi-lation compared with Statistics Denmark’s compilation of retail turnover.

Source: Statistics Denmark, Danmarks Nationalbank, Finance- Denmark, Nets and own calculations.

Globally, the prevalence of instant payment systems is still limited.2 To qualify as an instant payment, the payment must be transferable 24/7/365 and the funds must be made available to the payee within a short period of time.3 With the existing systems, the latter requirement ranges from a few seconds to a couple of minutes. Thus, the Danish Straksclearing is at the fast end of the spectrum of instant payment systems world-wide.

In Europe, eight countries have systems enabling citizens to make instant payments, cf. Chart 2. More-over, initiatives have been launched in the euro area

2 BIS Quarterly Review, March 2017, The Quest for Speed in Payments.

3 Cf. BIS CPMI, November 2016, Fast Payments – Enhancing the Speed and Availability of Retail Payments, No. 154.

Prevalence of instant payment systems in Europe

Note: Systems complying with the CPMI’s definition of instant payments, cf. CPMI, Fast Payments – Enhancing the Speed and Availability of Retail Payments, No. 154, November 2016.

Source: BIS Quarterly Review, March 2017, The Quest for Speed in Payments and Norges Bank.

Chart 2


ANALYSIS

The typical Dane has more than one payment cardThe Dankort is the most popular payment card in Denmark, with a total of about 5.4 million Dankort and VisaDankort issued.4 Each adult Dane has an

4 The VisaDankort is a co-branded payment card, i.e. it is both a Dankort and a Visa card. Approximately 4.7 million VisaDankort have been issued.

average of 1.2 Dankort. In 2016, approximately 1.4 billion Dankort payments were made, totalling kr. 415 billion, equivalent to about 20 per cent of GDP.

Moreover, many Danes have an international credit card such as MasterCard or Diners Club – typically as a personal supplement to their Dankort or as a company card. Danes use their international credit cards less frequently than their other payment cards. In 2016, around four out of ten payments







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00

Source: European Central Bank and Norges Bank.

Danes’ card use is among the highest in Europe

Chart 4 5







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00


6

with international credit cards were made outside Denmark.

Under-18s primarily hold international debit cards such as Visa Electron and MasterCard Debit. This should be seen in the context that international debit cards have built-in balance control, entailing that the payer cannot overdraw his or her account.

In recent years, international debit cards have also become more popular among the rest of the popu-lation. This is evidenced by the number of cards is-sued, which increased from slightly above 1 million to 2.4 million during the period from 2009 to 2016.

Denmark is a digital country with digital citizensDenmark is one of the most digitised countries in the world, with the highest score on digital performance in Europe, cf. Chart 5 and Box 4. One explanation is the large number of Danes shopping online. Accord-ing to data from Statistics Denmark, 77 per cent of the population aged 16-89 shopped online in 2016.

Denmark also scores high on public-sector digitisa-tion, especially for the scope of digital communica-tion between citizens and the public sector. Accord-ing to Statistics Denmark, 94 per cent of all citizens had NemID in 2016. Targeted public-sector focus on digitisation was ensured with the creation of the Danish Agency for Digitisation in 2011, which has

All consumers are entitled to a payment card

Box 3

In 2016, a statutory provision established that all Danish

consumers must have access to making payments using

payment cards, including online payments. This is part of

the Payment Accounts Act, based on an EU Directive.1 Pre-

viously, a good practice requirement stipulated that Dan-

ish banks should give all retail customers access to making

payments using a debit card with balance control.

1. Directive 2014/92/EU (PAD) on, inter alia, access to payment

accounts with basic features.

European Commission Index for Digital Economy and Society

Box 4

The Connectivity dimension measures the deployment of

broadband infrastructure, its quality and price level. The

Human Capital dimension measures e.g. individuals use

of the internet and their digital skills. The Use of Internet dimension accounts for the variety of activities perfor-

med by citizens online e.g. social media or online shop-

ping and banking. The Integration of Digital Technology

dimension measures the digitisation of businesses e.g.

use of electronic invoicing and online sales. The Digital Public Services dimension measures the digitisation of

public services and the availability of online services.

Source: European Commission, Digital Economy and Society

Index (DESI) 2017. For Norway data is from DESI 2016.

Digital communication with the public sector Box 5

An important element in the digitisation of the public sector

was the launch of the NemID shared electronic identification

solution in 2010. NemID was developed based on an agre-

ement between Danish banks and the public sector. NemID

is a shared login to both public and private self-service

solutions, such as online banking.

As part of the implementation of the Danish Agency for

Digitisation’s strategy, the Folketing (Danish parliament)

adopted legislation on mandatory digital self-service during

the period from 2012 to 2015. Under this legislation, it beca-

me mandatory for Danish citizens to use digital solutions to

communicate in writing with public authorities in a number

of service areas, for instance tax. All disbursements from the

public sector are also electronic. It also became mandatory

to receive digital post from the public sector. The target

efforts in digital communication between citizens and the

public sector are reflected in the high prevalence of NemID,

even among the oldest Danes.

Danes with NemID

0

10

20

30

40

50

60

70

80

90

100

Share

Wh

ole

po

pu

lati

on

75-8

9-ye

ar-o

lds

Source: Statistics Denmark.


ANALYSIS







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00

played a key part in spreading digitisation to virtual-ly the entire Danish population, cf. Box 5.

Danes are increasingly quick to embrace new payment technologyDanes have become increasingly quick to adopt new payment options over time, cf. Chart 6. About three years after the 2013 launch of MobilePay in the Danish payments market, this mobile payment solution had been adopted by 3 million users. When the Dankort was launched in 1984, it took more than 15 years for the solution to be adopted by the same number of users.

Contactless payments are the latest example of how quickly Danes can change their payment behaviour. The first contactless Dankort was launched in the Danish market in the summer of 2015. A year and a half later, more than half of all issued Dankort had a contactless feature, and contactless payments accounted for more than 15 per cent of all Dankort payments.


Chart 5 7







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00

Source: European Commission.


HAVNEGADE 5

DK-1093 COPENHAGEN K

WWW.NATIONALBANKEN.DK

Lindis [email protected]

FINANCIAL STABILITY








Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00


Chart 6

Source: Nets, MobilePay, Statistics Denmark.

8







Instantly










MOBILE PAYMENTS

THE STRAKS-CLEARING



THE SUM-CLEARING

DEBIT CARD

CONSUMER




50,00


Denmark 300

Norway 391

Sweden 290

Finland 259

UK 224

Netherlands 204

France 154

Spain 64

Germany 45Italy 37

EU average 104

2011 2015

Connectivity Human

capital

Integration of

digital technology

Digital public

service

Use of

internet


Denmark

Finland

Norway

Sweden

Netherlands

UK

Spain

Germany

France

Italy

806040200

EU avg.

1984 The Dankort


1999 Online banking

2013 MobilePay

2015 Contactless


50,00

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